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Freezing out ID theft
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In 2005 the Senate failed to pass federal bill 5418, which would have made credit freezes available to all U.S. residents.

ID theft victims and advocates of credit freezes say this type of security wouldn't be necessary if companies were more careful in their extension of credit and data.

Hendricks says that instead of being more responsible in verifying identities and checking for fraud, credit reporting agencies create products that require consumers to pay to monitor their credit files.
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Caplovitz agrees.

"Credit reporting agencies are essentially making money off of consumers by creating products to sell like ID-theft and fraud-monitoring systems instead of eliminating the problem," she says.

David Rubinger, vice president of communications at Equifax, says that credit reporting bureaus were not initially set up to monitor consumer accounts for ID theft or fraud. "The bureaus were simply started in an effort to scan consumers for creditworthiness."

But the question remains that if these agencies collect and sell our data and rightfully own our financial information, whose job is it to protect the information?

Kelly says that consumers should place a stronger importance on watching out for their own credit and take advantage of state laws, such as ones allowing credit freezes, if they can.

"It amazes me that such a small percentage of California residents take advantage of their state's credit freeze law, since the service was the first of its kind and has been available since Jan. 1, 2003," he says.

Kelly says consumers cannot expect the credit reporting agencies to look out for consumers' best interests; the agencies are looking out for their own interests.

He does, however, feel that credit bureaus will start to place a stronger emphasis on ID theft and fraud monitoring, but with a cost to the consumer.

Advocates strongly argue that companies that regularly fail to secure consumers' credit files should not be allowed to turn around and charge the consumers to protect themselves.

According to Hoofnagle, who has testified before Congress about identity theft, the credit-granting systems are so flawed that the only way to fix them is to give consumers a freeze.

As of Aug. 2, 2006, 25 states have credit freezes laws on their books.

Nineteen of the 25 states allow all consumers to place credit freezes on their credit reports; Illinois will follow suit beginning January 1, 2007. In six of the states, you can only place a credit freeze on your file if you have been the victim of ID theft and have a police report or security breach notification to prove it.

The cost of a security freeze varies from state to state. The cost to thaw a credit freeze also varies from state to state. However, most states do offer the freeze free of charge if you can prove you have been victimized by an identity thief.

To place a credit freeze on your file, you must mail, send a secure e-mail or call in the following information to at least one of the three major national credit bureaus, Experian, TransUnion or Equifax:

  • Full name: First name, middle name, last name, Jr., etc.
  • Current home address and addresses for past two years, Social Security number and date of birth
  • Payment by check, money order or credit card. You will be asked to verify the name, account number and expiration date on the credit card.
  • Copy of driver's license, military ID card or other government-issued ID card
  • Copy of utility bill, bank or insurance statement

Costs vary from state to state, but imposing a freeze will run anywhere from zero to $20. Lifting it can come free or cost up to $18.

Credit bureaus must place a freeze no later than five business days after receiving your written or telephone request, or three business days after recieving your e-mail request. Each of the credit bureaus will send you a personal identification number, or PIN.

You will also get instructions on how to lift the freeze. Each state regulates their credit freeze laws differently, so check with your state's attorney general's office.

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